BRAG Bragg Gaming Group Inc

Proprietary Online Content and Market Expansion Coupled with Customer Additions Driving Continued Growth

Reiterates Full Year 2022 Guidance for Revenue of €68-72 million (USD $76-80 Million) and Adjusted EBITDA of €9.5-10.5 million (USD $10.5-11.7 Million)

Bragg Gaming Group (NASDAQ: BRAG, TSX: BRAG) ("Bragg" or the "Company"), a global B2B gaming technology and content provider, today reported record financial results for the fourth quarter and full year ended December 31, 2021. The Company also provided an update on its strategic growth initiatives and reiterated its full year 2022 revenue and Adjusted EBITDA guidance.

 

Summary of Q4-21 and FY-21 Financial and Operational Highlights

Euros (millions)

Q4-21

Q4-20

Change

Revenue

€15.8

€13.8

14.4%

Gross profit

€8.0

€6.0

33.3%

Gross profit margin

51.0%

43.8%

720bps

Adjusted EBITDA

€1.5

€1.3

22.2%

Adjusted EBITDA margin

9.8%

9.1%

70bps

Wagering revenue

€3.1B

€3.4B

-8.4%

 

Euros

FY-21

FY-20

Change

Revenue

€ 58.3

€ 46.4

25.6%

Adjusted EBITDA

€7.2

€5.5

29.8%

Wagering revenue

€14.3B

€11.8B

21.1%

Management Commentary “The 2021 fourth quarter concluded an active and productive year for Bragg as continued execution on our key strategic initiatives drove significant operational accomplishments and strong financial results,” said Yaniv Spielberg, Chief Strategy Officer for Bragg Gaming. “In the fourth quarter we went live with our iGaming offering in the newly regulated Netherlands market and also went live in the U.K, the world’s largest iGaming market. Since the beginning of 2021, we have introduced player-popular content in six regulated European markets, increasing our total addressable market (“TAM”) by more than $10 billion to approximately USD$13.5 billion. We have also made significant progress towards our entry into additional new markets and expect to go live with our games in the U.S. and Canada later this year. Furthermore, we have also made substantial progress on our initiative to offer more new high-performing propriety and exclusive third-party online content through our June 2021 acquisition of Wild Streak, the recent introduction of our first new internally developed games and new exclusive content licensing agreements with leading game developers. Bragg’s continued progress with its new market and content monetization initiatives, combined with 42% growth in new customers in 2021, drove our strong fourth quarter and full year financial results.

“Fourth quarter revenue of EUR €15.8 million (USD $17.5 million) and Adjusted EBITDA of EUR €1.5 million (USD $1.7 million) surpassed the preliminary results we provided last month and were both fourth quarter records. As a result, 2021 full year revenue and Adjusted EBITDA rose 26% and 30%, respectively to records of EUR €58.3 million (USD $64.7 million) and EUR €7.2 million (USD $8.0 million). In addition, the growing mix of higher gross margin in-house content and platform revenue contributed to a record quarterly gross profit margin of 51% in the fourth quarter, reflecting a 720 basis point year-over-year improvement. Our strong margin performance in the quarter highlights the significant progress we’ve made against our goal to grow gross profit margin to approximately 60% by 2024.

“Our operating momentum has continued in the early months of 2022. We also continue to make progress on closing our acquisition of Spin Games as Bragg has completed all of its regulatory requirements. We are now awaiting final review by the sole remaining regulatory body which is expected to be complete in the next few months. Importantly, we have made substantial progress on the integration of the Spin Games technology platform with our ORYX platform and have already submitted the integrations for certification by various approved U.S. gaming laboratories. As such, once we receive the remaining required regulatory approval to complete this acquisition, we expect to be able to introduce our iGaming content to players in a number of U.S. states very quickly. Importantly, the pace of U.S. deployments will benefit from Spin Games’ existing relationships with more than 30 U.S. iGaming operators.”

Mr. Spielberg concluded, “Our planned entry into the U.S. and Canada as well as additional regulated European markets this year has Bragg on track to grow our year-end 2022 TAM to more than USD$21 billion. The strong performance we have achieved in a number of our recently entered markets as well as our existing markets in the early months of 2022, and the ongoing roll-out of our new proprietary games, amplifies our confidence for continued operating momentum. As a result, we are reiterating our outlook for 2022 full year revenue of EUR €68-72 million (USD $76-80 million) and Adjusted EBITDA of EUR €9.5-10.5 million (USD $10.5-11.7 million). The midpoints of these ranges represent growth of 20% and 39%, respectively, over reported full year 2021 revenue and Adjusted EBITDA. We believe the ongoing execution of our operating priorities favourably positions Bragg to both further accelerate this growth in 2023 and create new near- and long-term shareholder value.”

Fourth Quarter 2021 Financial Results and other Key Metrics Highlights

• Revenue increased by 14.4% to EUR €15.8 million (USD $17.5 million) in Q4 2021 compared to EUR €13.8 million (USD $15.3 million) in Q4 2020.
• Wagering revenue generated by customers decreased 8.8% to EUR €3.1 billion (USD $3.4 billion) compared to EUR €3.4 billion (USD $3.8 billion) in Q4 2020 as a result of changes in the product mix, towards PAM, managed services and proprietary content which drove improved gross profit and Adjusted EBITDA.
• Gross profit increased by 33.3% to EUR €8.0 million (USD $8.9 million) from EUR €6.0 million (USD $6.7 million) in Q4 2020, reflecting higher revenue and a 720 basis point margin improvement to 51.0%.
  • The margin expansion is primarily the result of the continued shift towards a higher proportion of revenues from iGaming and turnkey services, which have lower associated cost of sales when compared to games and content.
• Net loss for the period was EUR €1.6 million (USD $1.8 million), a decline from a net loss of EUR €5.3 million (USD $5.9 million) in Q4 2020, primarily due to higher gross profit and a reduction in costs related to deferred consideration payable, partially offset by the incremental increase in employee costs and professional fees as a result of the Nasdaq listing.
• Adjusted EBITDA was EUR €1.5 million (USD $1.7 million), an increase of 22.2% compared to EUR €1.3 million (USD $1.4 million) in Q4 2020. Adjusted EBITDA margin increased by 70 basis points to 9.8%.
• Cash and cash equivalents as of December 31, 2021 was EUR €16.0 million (USD $17.8 million).

2021 Full Year Financial Results and other Key Metrics Highlights

• Revenue increased by 25.6% to EUR €58.3 million (USD $64.7 million) for 2021 compared to EUR €46.4 million (USD $51.5 million) in 2020.
• Wagering revenue generated by customers increased 21.1% to EUR €14.3 billion (USD $15.9 billion) compared to EUR €11.8billion (USD $13.1 billion) in 2020.
• The number of unique players using Bragg games via its Oryx Hub distribution platform and content increased by 11.2% to 6.5 million, from 5.9 million in 2020.
• Gross profit increased by 40.3% to EUR €28.3million (USD $31.4 million) from EUR €20.2million (USD $22.4 million) in 2020, reflecting a 510 basis point margin improvement to 48.6%.
• Net loss for the period was EUR €7.5 million (USD $8.3 million), an improvement from the net loss of EUR €14.6 million (USD $16.2 million) in 2020.
• Adjusted EBITDA was EUR €7.2 million (USD $8.0 million), an increase of 29.8% compared to EUR €5.5 million (USD $6.1 million) in 2020. Adjusted EBITDA margin increased by 40 basis points to 12.3%.

Full Year 2022 Revenue and Adjusted EBITDA Guidance Bragg today reiterated its outlook for 2022 full year expected revenue of EUR €68-72 million (USD $76-80 million) and Adjusted EBITDA of EUR €9.5-10.5 million (USD $10.5-11.7 million). The midpoints of the 2022 revenue and Adjusted EBITDA guidance ranges represent growth of 20% and 39%, respectively, over the reported full year 2021 revenue and Adjusted EBITDA.

Investor Conference Call The Company will host a conference call today, March 10, 2022, at 8:00 a.m. Eastern Time, to discuss its fourth quarter 2021 results. During the call, management will review a presentation that will be made available to download or follow as a webcast at http://www.bragg.games/investors.

To join the call, please use the below dial-in information: Participant Toll-Free Dial-In Number (US/CANADA): (888) 210-4227 Participant Toll Dial-In Number (INTERNATIONAL): (646) 960-0341 United Kingdom: Toll-Free: +44 800 358 0970 Conference ID: 2522980

Or join the webcast at http://www.bragg.games/investors under the Media section.

A replay of the call will be available until March 21, 2022 following the conclusion of the live call. In order to access the replay, dial (647) 362-9199 or (800) 770-2030 (toll-free) and use the passcode 2522980.

Cautionary Statement Regarding Forward-Looking Information This news release may contain forward-looking statements or “forward-looking information” within the meaning of applicable Canadian securities laws (“forward-looking statements”), including, without limitation, statements with respect to the following: the Company’s strategic growth initiatives and corporate vision and strategy; financial guidance for 2021 and 2022, expected performance of the Company’s business; expansion into new markets; the impact of the new German regulatory regime, expected future growth and expansion opportunities; expected benefits of transactions, including the acquisition of Wild Streak and Spin; expected future actions and decisions of regulators and the timing and impact thereof. Forward-looking statements are provided for the purpose of presenting information about management’s current expectations and plans relating to the future and allowing readers to get a better understanding of the Company’s anticipated financial position, results of operations, and operating environment. Often, but not always, forward-looking statements can be identified by the use of words such as “plans”, “expects” or “does not expect”, “is expected”, “budget”, “scheduled”, “estimates”, “forecasts”, “intends”, “anticipates” or “does not anticipate”, or “believes”, or describes a “goal”, or variation of such words and phrases or state that certain actions, events or results “may”, “could”, “would”, “might” or “will” be taken, occur or be achieved.

All forward-looking statements reflect the Company’s beliefs and assumptions based on information available at the time the statements were made. Actual results or events may differ from those predicted in these forward-looking statements. All of the Company’s forward-looking statements are qualified by the assumptions that are stated or inherent in such forward-looking statements, including the assumptions listed below. Although the Company believes that these assumptions are reasonable, this list is not exhaustive of factors that may affect any of the forward-looking statements. The key assumptions that have been made in connection with the forward-looking statements include the following: the impact of COVID-19 on the business of the Company; the closing of the acquisition of Spin; the integration of Wild Streak; the regulatory regime governing the business of the Company; the operations of the Company; the products and services of the Company; the Company’s customers; the growth of Company’s business, the meeting minimum listing requirements of Nasdaq; which may not be achieved or realized within the time frames stated or at all; the integration of technology; and the anticipated size and/or revenue associated with the gaming market globally.

Forward-looking statements involve known and unknown risks, future events, conditions, uncertainties and other factors that may cause actual results, performance or achievements to be materially different from any future results, prediction, projection, forecast, performance or achievements expressed or implied by the forward-looking statements. Such factors include, among others, the following: risks related to the Company’s business and financial position; that the Company may not be able to accurately predict its rate of growth and profitability; the risks associated with the completion of the acquisition of Spin and ability to satisfy closing conditions; risks associated with the integration of Wild Streak; risks associated with general economic conditions; adverse industry events; future legislative and regulatory developments; the inability to access sufficient capital from internal and external sources; the inability to access sufficient capital on favorable terms; realization of growth estimates, income tax and regulatory matters; the increased costs associated with meeting the minimum listing requirements on Nasdaq; the ability of the Company to implement its business strategies; competition; economic and financial conditions, including volatility in interest and exchange rates, commodity and equity prices; changes in customer demand; disruptions to our technology network including computer systems and software; natural events such as severe weather, fires, floods and earthquakes; and risks related to health pandemics and the outbreak of communicable diseases, such as the current outbreak of COVID-19. Although the Company has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors that cause actions, events or results not to be as anticipated, estimated or intended. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements.

The Company disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events, or otherwise, except in accordance with applicable securities laws.

Non-IFRS Financial Measures Statements in this news release make reference to “Adjusted EBITDA”, which is a non-IFRS (as defined herein) financial measure that the Company believes is appropriate to provide meaningful comparison with, and to enhance an overall understanding of, the Company’s past financial performance and prospects for the future. The Company believes that “Adjusted EBITDA” provides useful information to both management and investors by excluding specific expenses and items that management believe are not indicative of the Company’s core operating results. “Adjusted EBITDA” is a financial measure that does not have a standardized meaning under International Financial Reporting Standards (“IFRS”). As there is no standardized method of calculating “Adjusted EBITDA”, it may not be directly comparable with similarly titled measures used by other companies. The Company considers “Adjusted EBITDA” to be a relevant indicator for measuring trends in performance and its ability to generate funds to service its debt and to meet its future working capital and capital expenditure requirements. “Adjusted EBITDA” is not a generally accepted earnings measure and should not be considered in isolation or as an alternative to net income (loss), cash flows or other measures of performance prepared in accordance with IFRS. Adjusted EBITA is more fully defined and discussed, and reconciliation to IFRS financial measures is provided, in Company’s Management’s Discussion and Analysis (“MD&A”) for the three- and twelve-month periods ended December 31, 2021.

About Bragg Gaming Group Bragg Gaming Group (NASDAQ: BRAG, TSX: BRAG) is a growing global gaming technology and content group and owner of leading B2B companies in the iGaming industry. Since its inception in 2018, Bragg has grown to include operations across Europe, North America and Latin America and is expanding into an international force within the global online gaming market.

Through its wholly-owned subsidiary ORYX Gaming, Bragg delivers proprietary, exclusive and aggregated casino content via its in-house remote games server (RGS) and ORYX Hub distribution platform. ORYX offers a full turnkey iGaming solution, including its Player Account Management (PAM) platform, as well as managed operational and marketing services.

Nevada-based Wild Streak Gaming is Bragg's wholly owned premium US gaming content studio. Wild Streak has a popular portfolio of casino games that are offered across land-based, online and social casino operators in global markets including the U.S. and U.K.

In May 2021, Bragg announced its planned acquisition of Nevada-based Spin Games, B2B gaming technology and content provider currently servicing the U.S. market. Spin holds licenses in key iGaming-regulated U.S. states and supplies Tier 1 operators in the region. Find out more.

Financial tables follow

 

BRAGG GAMING GROUP INC.

CONSOLIDATED STATEMENTS OF LOSS AND COMPREHENSIVE LOSS

(In thousands, except per share amounts)

  Three Months Ended December 31, Year Ended December 31, EUR 000

2021

 

2020

 

2021

 

2020

 

  Revenue

15,758

 

13,778

 

58,319

 

46,421

 

Cost of revenue

(7,722

)

(7,748

)

(29,998

)

(26,232

)

  Gross Profit

8,036

 

6,030

 

28,321

 

20,189

 

Selling, general and administrative expenses

(9,899

)

(10,416

)

(34,832

)

(22,828

)

Gain on remeasurement of consideration receivable

50

 

37

 

98

 

19

 

Loss on remeasurement of deferred and contingent consideration

-

 

(947

)

-

 

(9,276

)

Loss on disposal of intangible assets

(89

)

-

 

(89

)

-

 

  Operating Loss

(1,902

)

(5,296

)

(6,502

)

(11,896

)

Net interest expense and other financing charges

(52

)

(109

)

(184

)

(1,384

)

  Loss Before Income Taxes

(1,954

)

(5,405

)

(6,686

)

(13,280

)

Income taxes

324

 

89

 

(826

)

(1,196

)

  Net Loss from Continuing Operations

(1,630

)

(5,316

)

(7,512

)

(14,476

)

Net loss from discontinued operations after tax

-

 

(2

)

-

 

(90

)

  Net Loss

(1,630

)

(5,318

)

(7,512

)

(14,566

)

Items to be reclassified to net loss: Cumulative translation adjustment - continuing operations

677

 

(129

)

2,590

 

157

 

Cumulative translation adjustment - discontinued operations

-

 

(80

)

-

 

(95

)

  Items that will not be reclassified to net loss: Remeasurement of employee obligations

44

 

-

 

44

 

-

 

  Net Comprehensive Loss

(909

)

(5,527

)

(4,878

)

(14,504

)

  Basic and Diluted Loss Per Share Continuing operations

(0.08

)

(0.52

)

(0.39

)

(1.69

)

Discontinued operations

0.00

 

(0.00

)

0.00

 

(0.01

)

 

(0.08

)

(0.52

)

(0.39

)

(1.70

)

  Millions Millions Millions Millions   Weighted average number of shares - basic and diluted

20.0

 

10.3

 

19.5

 

8.6

 

 

BRAGG GAMING GROUP INC.

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

(in thousands)

As at As at December 31, December 31, EUR 000

2021

 

2020

 

  Cash and cash equivalents

16,006

 

26,102

 

Trade and other receivables

8,454

 

10,297

 

Prepaid expenses and other assets

2,442

 

263

 

Consideration receivable

56

 

148

 

  Total Current Assets

26,958

 

36,810

 

Property and equipment

252

 

272

 

Right-of-use assets

579

 

708

 

Consideration receivable

-

 

44

 

Intangible assets

30,845

 

14,279

 

Goodwill

24,728

 

19,938

 

Other assets

28

 

43

 

  Total Assets

83,390

 

72,094

 

  Trade payables and other liabilities

14,357

 

16,968

 

Deferred revenue

27

 

102

 

Income taxes payable

784

 

1,318

 

Lease obligations on right of use assets - current

149

 

133

 

Deferred and contingent consideration

-

 

11,521

 

  Total Current Liabilities

15,317

 

30,042

 

Deferred income tax liabilities

1,243

 

1,415

 

Non-current lease obligations on right of use assets

451

 

593

 

Other non-current liabilities

184

 

147

 

  Total Liabilities

17,195

 

32,197

 

  Share capital

100,285

 

62,304

 

Warrants

-

 

1,642

 

Broker warrants

38

 

399

 

Shares to be issued

13,746

 

22,608

 

Contributed surplus

18,385

 

14,325

 

Deficit

(68,743

)

(61,231

)

Accumulated other comprehensive income (loss)

2,484

 

(150

)

  Total Equity

66,195

 

39,897

 

  Total Liabilities and Equity

83,390

 

72,094

 

 

BRAGG GAMING GROUP INC.

UNAUDITED SELECTED FINANCIAL GAAP AND NON-GAAP MEASURES

(in thousands)

Three Months Ended December 31, Year Ended December 31, EUR 000

2021

 

2020

 

2021

 

2020

 

  Revenue

15,758

 

13,778

 

58,319

 

46,421

 

Operating loss

(1,902

)

(5,296

)

(6,502

)

(11,896

)

EBITDA

(325

)

(4,623

)

(1,705

)

(9,023

)

Adjusted EBITDA

1,538

 

1,259

 

7,198

 

5,546

 

 

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20220310005132/en/

Yaniv Spielberg Joseph Jaffoni, Richard Land, James Leahy Chief Strategy Officer JCIR Bragg Gaming Group 212-835-8500 or bragg@jcir.com info@bragg.games